Chapter 7 vs. Chapter 13: Here’s What You Need to Know

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There are two different ways for households to declare bankruptcy. Each has its pros and cons. Chapter 7 bankruptcy can discharge some or all of your debt, but it comes at a cost. Chapter 13 bankruptcy is a restructuring of your debt, giving you more time to pay and possibly better terms. Depending on your income, you may not have a choice between the two.

Chapter 7 bankruptcy is also known as a liquidation proceeding. In exchange for debt discharge, you will need to surrender some of your assets (there are many assets, such as your home, that you can keep in bankruptcy). In essence, you are starting from scratch with little to no debt, but your entire financial situation will reset. However, there is a means test that could keep someone from filing for Chapter 7. It is possible to make too much to qualify for this relief.

Chapter 13 bankruptcy will not wipe out your debt but will give you breathing room to pay it back. The flip side is that you get to keep your assets, and there is no liquidation. This is the type of bankruptcy filing that higher-income households will usually use. If you have regular income and the ability to repay your debt, you are better off choosing this alternative. You will have a payment plan to follow, and then your responsibility for your debt may end. This can last as long as five years.

Georgia Bankruptcy Attorneys Helping Clients

Moffitt Law LLC can explain the two different types of bankruptcy and let you know which one is right for you. Call us today at (762) 212-3951 or contact us online to see if bankruptcy is the best option.


What is the means test?

This determines whether Chapter 7 bankruptcy is an option available to you.

Which bankruptcy is better for me?

You may not have a choice of which type of bankruptcy that you file, but it all depends on your situation.

How long does the bankruptcy process take?

It depends on which type you file. Chapter 13 can take years because you are following a plan.

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